THE NETHERLANDS: Protection of selective-distribution systems by the Dutch Supreme Court.

Jaap VAN TILL | NETHERLANDS | 2010-04-14


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The facts of the matter were as follows. The Dutch distributor Alfa Romeo Nederland B.V. distributes the Alfa Romeo cars in The Netherlands by means of a selective-distribution system. The official dealers admitted to this selective-distribution network are bound by resale restrictions. The defendant in this matter was an official dealer originally which had ceased to be one in the 1990’s. It, however, continued to sell new Alfa Romeo cars, obtaining them from official dealers who, by doing so, acted in breach of their contractual obligations under the selective-distribution agreement.

The distributor for The Netherlands requested that the non-official dealer be put under a prohibition from buying new Alfa Romeo cars from official dealers and from selling those new cars, as such conduct was, in the distributor’s opinion, unlawful towards both the distributor itself and the official dealers, since the non-official dealer was knowingly profiting from the fact that the official dealers were breaching their contractual obligations towards the distributor.

The Supreme Court ruled that it is not unlawful in itself that when dealing with a party one knows that the latter is acting in breach of its contractual obligations towards another party. However, the Supreme Court ruled that such conduct may be unlawful under specific circumstances. In the matter at hand, the Supreme Court ruled that the conduct of a non-official dealer may be unlawful towards the official dealers bound by the selective-distribution network if a non-official dealer (a) sells products that are obtained by using an official dealer belonging to the selective-distribution network to breach its obligations under this selective distribution system, (b) competes with official dealers that are bound to the same selective-distribution network and (c) profits from the fact that the official dealers are at a disadvantage due to the requirements following from the selective-distribution agreement (e.g. such as investments to comply with the sales standards and resale restrictions).

The Supreme Court moreover ruled that such conduct of a non-official dealer may also be unlawful towards the distributor if they undermine the selective-distribution system (e.g. official dealers evading their contractual obligations or terminating their participation to the selective-distribution system, reluctance of third parties to join that system).

The Supreme Court has referred the matter to the Court of Appeal, which shall now have to re-investigate the facts taking into consideration the opinion of the Supreme Court.

Whatever the final outcome in this specific case may be, the ruling of the Supreme Court is an important step forward in the protection of selective-distribution systems.



Jaap van Till, Agency & distribution country Expert for Netherlands



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